References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to 180 Life Sciences Corp. (formerly known as KBL Merger Corp.
IV). References to our "management" or our "management team" refer to our
officers and directors, and references to the "sponsor" refer to KBL IV Sponsor
LLC. The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the financial
statements and the notes thereto contained elsewhere in this Quarterly Report.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly
Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements.
Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek"
and variations and similar words and expressions are intended to identify such
forward-looking statements. Such forward-looking statements relate to future
events or future performance, but reflect management's current beliefs, based on
information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and
results discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's Annual Report on Form 10-K for the year ended
December 31, 2019 filed with the SEC. The Company's securities filings can be
accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as
expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Recent Developments
On February 20, 2019, we filed a definitive proxy statement with the SEC
soliciting the approval of our stockholders for, among other things, a proposal
to extend the period of time for which we are required to consummate a Business
Combination from March 7, 2019 to June 7, 2019 (or September 9, 2019 if the
Company has executed a definitive agreement for a Business Combination by June
7, 2019) or such earlier date as determined by our board of directors.
On March 5, 2019, our stockholders approved to extend the period of time for
which we are required to consummate a Business Combination until June 7, 2019
(or September 9, 2019 if we have executed a definitive agreement for a Business
Combination by June 7, 2019) or such earlier date as determined by our board of
directors (the "First Extension Amendment", and such later date, the "First
Extension Combination Period"). The number of shares of common stock presented
for redemption in connection with the First Extension Amendment was 5,128,523.
We paid cash in the aggregate amount of $52,829,304, or approximately $10.30 per
share, to redeeming stockholders. As a result of the payment on the shares of
common stock presented for redemption in connection with the First Extension
Amendment, cash and marketable securities held in the Trust Account decreased to
$65,633,068. In addition, on March 8, 2019, an aggregate of $573,433 was loaned
to us and deposited into the Trust Account, which amount is equal to $0.09 for
each of the 6,371,477 Public Shares that were not redeemed. Such amount was paid
from funds loaned to us by the Sponsor.
In connection with the approval of the First Extension Amendment, the Sponsor or
its designees had previously agreed to loan us $0.03 for each Public Share that
was not redeemed for each calendar month commencing on June 7, 2019, and on the
7th day of each subsequent month, or portion thereof, that was needed by us to
complete a Business Combination from June 7, 2019 until the First Extension
Combination Period. The Sponsor or its designees had the sole discretion whether
to continue extending loans for additional calendar months until the First
Extension Combination Period and if the Sponsor determined not to continue
extending loans for additional calendar months, its obligation to make
additional loans following such determination would terminate.
On March 15, 2019, we issued the Sponsor the March Promissory Note, pursuant to
which all outstanding advances were converted into loans under the March
Promissory Note. The March Promissory Note is unsecured, non-interest bearing
and due on the earlier of (i) the consummation of a Business Combination or (ii)
our liquidation. Up to $1,000,000 of the loans under the March Promissory Note
may be converted, at the Sponsor's discretion, into units of the post Business
Combination entity at a price of $10.00 per unit. The units would be identical
to the units issued in the private placement concurrently with the Initial
Public Offering the Private Units. As of June 30, 2020, there was $337,301
outstanding under the March Promissory Note.
34
On March 15, 2019, we entered into an expense reimbursement agreement (the
"Expense Reimbursement Agreement") with the Sponsor and KBL Healthcare
Management, LLC ("KBL Management"), an affiliate of the Sponsor and our Chief
Executive Officer, in recognition of the compensation expense incurred by KBL
Management for services provided by one of their employees on behalf of the
Sponsor to us. The Expense Reimbursement Agreement is effective January 1, 2019
until the earlier of (i) the consummation of a Business Combination or (ii) our
liquidation. Under the Expense Reimbursement Agreement, we will reimburse the
Sponsor for the compensation expense incurred by KBL Management for its employee
in the amount of $180,000 per year plus health insurance costs of $1,139 per
month. At our election, we may pay amounts due pursuant to a non-interest
bearing, unsecured promissory note. As of June 30, 2020, amounts due under the
Expense Reimbursement Agreement totaled $337,301 and has been included in the
March Promissory Note discussed above.
On April 10, 2019, we entered into the Term Sheet with 180, the 180
Subsidiaries, and Tyche, pursuant to which we would acquire 100% of the
outstanding equity and equity equivalents of 180 (including options, warrants or
other securities that have the right to acquire or convert into equity
securities of 180) in exchange for 17,500,000 shares of our common stock,
subject to adjustment. Due to Canadian tax considerations, it was contemplated
that 180 would not be acquiring the shares of the Canadian shareholders in
Katexco and CBR Pharma. Those shareholders will continue to hold Exchangeable
Shares in each of CannBioRex Purchaseco ULC and Katexco Purchaseco ULC, Canadian
subsidiaries of 180, which are exchangeable for common stock of 180 and
ultimately, upon the Closing, become exchangeable for shares of our common
stock. The Term Sheet was intended to express only a mutual indication of
interest in the Business Combination and did not represent a legally binding
commitment or obligation on the part of the parties. We announced the entry into
the Term Sheet on April 16, 2019 but did not identify 180.
In connection with the Term Sheet, the 180 Parties agreed to loan us $400,000 to
be used to fund our operating expenses and agreed to loan us up to an additional
$300,000 to be used for extension expenses. The loans are interest-free loans
and can be pre-paid at any time without penalty, but are required to be paid
back (subject to a customary waiver against the Trust Account) upon the earlier
of (i) the Closing, (ii) the consummation by us of a transaction with a third
party constituting our initial Business Combination, or (iii) our liquidation if
we do not consummate an initial Business Combination prior to our deadline to do
so. Promptly after signing the Term Sheet, we received the loan of $400,000 to
fund the operating expenses.
In connection with the Term Sheet, 180 paid, on the Company's behalf, $650,000
to the Sponsor, to purchase $650,000 of the obligations owed to the Sponsor
under the March Promissory Note (the "Sponsor Note"), but Tyche waived any
rights under the assigned portion of the Sponsor Note to convert the obligations
under the assigned portion of the Sponsor Note into units of the post Business
Combination entity. In the Term Sheet, Tyche also agreed to provide equity
financing for the Business Combination to ensure that we have sufficient cash at
the Closing to meet our $5,000,001 net tangible assets test.
On May 20, 2019, we filed a definitive proxy statement with the SEC soliciting
the approval of our stockholders for, among other things, a proposal to extend
the period of time for which we are required to consummate a Business
Combination from June 7, 2019 (or September 9, 2019 if we have executed a
definitive agreement for a Business Combination by June 7, 2019) to September 9,
2019 (or December 9, 2019 if the Company has executed a definitive agreement for
a Business Combination by September 9, 2019) or such earlier date as determined
by our board of directors.
On June 5, 2019, our stockholders approved to further extend the period of time
for which we were required to consummate a Business Combination from June 7,
2019 to September 9, 2019 (or December 9, 2019 if we had executed a definitive
agreement for a Business Combination by September 9, 2019) or such earlier date
as determined by our board of directors (the "Second Extension Amendment", and
such later date, the "Second Combination Period"). The number of shares of
common stock presented for redemption in connection with the Second Extension
Amendment was 1,580,762. We paid cash in the aggregate amount of $16,476,233, or
approximately $10.42 per share, to redeeming stockholders. As a result of the
payment on the shares of common stock presented for redemption in connection
with the Second Extension Amendment, cash and marketable securities held in the
Trust Account decreased to $49,933,473.
In connection with the approval of the Second Extension Amendment, the Sponsor
or its designees agreed to loan us $0.0225 for each Public Share that was not
redeemed for each calendar month commencing on June 7, 2019, and on the 7th day
of each subsequent month, or portion thereof, that was needed by us to complete
a Business Combination from June 7, 2019 until the Second Combination Period.
Given the longer period of time needed to potentially complete a Business
Combination, such agreement to pay $0.0225 for each Public Share that was not
redeemed for each calendar month commencing on June 7, 2019 replaced and
superseded the previous agreement to loan us $0.03 for each Public Share that
was not redeemed for each calendar month commencing on June 7, 2019. The Sponsor
or its designees had the sole discretion whether to continue extending loans for
additional calendar months until the Second Combination Period and if the
Sponsor determined not to continue extending loans for additional calendar
months, its obligation to make additional loans following such determination
would terminate.
35
On July 25, 2019, we, KBL Merger Sub, the 180 Parties and the Stockholder
Representative entered into the Business Combination Agreement pursuant to which
KBL Merger Sub will merge with and into 180 with 180 surviving the merger and
continuing as our wholly-owned subsidiary, and in consideration thereof, the
stockholders of 180 shall, at the option of the holder, receive shares of our
common stock and the existing Exchangeable Shares will be adjusted in accordance
with the terms of CannBioRex Purchaseco ULC or Katexco Purchaseco ULC, as
applicable, governing the Exchangeable Shares such that they will be multiplied
by the Exchange Ratio (as defined in the Business Combination Agreement) and
become exchangeable into shares of our common stock.
In connection with the entry into Business Combination Agreement, the Sponsor
deposited in escrow with a third-party escrow agent the Escrowed Shares. The
Escrowed Shares will be transferred to Tyche upon the earlier of (i) the Closing
or (ii) a liquidation; provided, that if we consummate our initial Business
Combination with a third party other than 180 or its affiliates, upon the
consummation of such Business Combination, in addition to paying certain loans,
the Sponsor will transfer to Tyche a number of Escrowed Shares equal in value to
three times the amount of the loans, with each Escrowed Share valued at the
price paid to each public stockholder that redeems its shares in connection with
such initial Business Combination.
On November 19, 2019, we filed a definitive proxy statement with the SEC
soliciting the approval of our stockholders for, among other things, a proposal
to extend the period of time for which we are required to consummate a Business
Combination from September 9, 2019 (or December 9, 2019 if we have executed a
definitive agreement for a Business Combination by September 9, 2019) until
April 9, 2020 or such earlier date as determined by our board of directors.
On November 12, 2019, we filed with the SEC a Registration Statement on Form
S-4, including a preliminary proxy statement/prospectus, soliciting the approval
of our stockholders for, among other things, a proposal to approve and adopt the
Business Combination Agreement.
On December 6, 2019, our stockholders approved to extend the period of time for
which we are required to consummate a Business Combination until April 9, 2020
or such earlier date as determined by our board of directors (the "Third
Extension Amendment", and, together with the First Extension Amendment and the
Second Extension Amendment, the "Extension Amendments", and such later date, the
"Third Combination Period"). The number of shares of common stock presented for
redemption in connection with the Third Extension Amendment was 3,676,448. We
paid cash in the aggregate amount of $39,121,812, or approximately $10.64 per
share, to redeeming stockholders. As a result of the payment on the shares of
common stock presented for redemption in connection with the Third Extension
Amendment, cash and marketable securities held in the Trust Account decreased to
$11,857,136. As of June 30, 2020, an aggregate of $713,604 was deposited into
the Trust Account.
In connection with the approval of the Third Extension Amendment, the Sponsor or
its designees agreed to loan us $0.02 for each Public Share that was not
redeemed for each calendar month commencing on December 9, 2019, and on the 9th
day of each subsequent month, or portion thereof, that is needed by us to
complete an initial Business Combination from December 9, 2019 until the Third
Combination Period. Given the longer period of time needed to potentially
complete a Business Combination, such agreement to pay $0.02 for each Public
Share that was not redeemed for each calendar month commencing on December 9,
2019 replaced and superseded the previous agreement to loan us $0.0225 for each
Public Share that was not redeemed for each calendar month commencing on
December 9, 2019. The Sponsor or its designees had the sole discretion whether
to continue extending loans for additional calendar months until the Third
Combination Period and if the Sponsor determined not to continue extending loans
for additional calendar months, its obligation to make the additional loans
following such determination would terminate.
36
On January 13, 2020, 180 filed an amendment to its certificate of incorporation
with the Delaware Secretary of State to change its name from "CannBioRx Life
Sciences Corp." to "180 Life Sciences Corp."
On January 29, 2020, the Business Combination Agreement was amended to extend
the termination date to April 9, 2020.
On February 10, 2020, we filed with the SEC an amendment to the Registration
Statement on Form S-4, including a preliminary proxy statement/prospectus
originally filed with the SEC by us on November 12, 2019, soliciting the
approval of our stockholders for, among other things, a proposal to approve and
adopt the Business Combination Agreement.
On April 8, 2020, our stockholders approved to further extend the period of time
for which we are required to consummate a Business Combination until July 9,
2020 or such earlier date as determined by the Board (the "Fourth Extension
Amendment"). The number of shares of common stock presented for redemption in
connection with the Fourth Extension Amendment was 67,665. We paid cash in the
aggregate amount of $728,884, or approximately $10.77 per share, to redeeming
stockholders. As a result of the payment on the shares of common stock presented
for redemption in connection with the Fourth Extension Amendment, cash and
marketable securities held in the Trust Account decreased to $11,273,945 at
April 9, 2020.
On July 9, 2020, our stockholders approved to further extend the period of time
for which we are required to consummate a Business Combination (the "Fifth
Extension Amendment") from July 9, 2020 to November 9, 2020 or such earlier date
as determined by the Board. The number of shares of common stock presented for
redemption in connection with the Fifth Extension Amendment was 106,186. We paid
cash in the aggregate amount of $1,160,695, or approximately $10.93 per share,
to redeeming stockholders. As a result of the payment on the shares of common
stock presented for redemption in connection with the Fifth Extension Amendment,
cash and marketable securities held in the Trust Account decreased to
$10,279,476 at July 9, 2020.
During the year ended December 31, 2019, we received additional advances in the
aggregate amount of $1,699,825 from the 180 Parties to be used by us to fund our
operating expenses, deal transaction expenses and any financing expenses for the
Transaction (the "Operating Expenses") and any future extensions of the deadline
for us to consummate a Business Combination (the "Extension Expenses"). As of
June 30, 2020, a total of $1,379,815 is due under the advances from the 180
Parties.
On June 12, 2020, we entered into the Dominion Convertible Notes with Dominion
Capital LLC (the "Holder"), which was issued to the Holder in conjunction with
400,000 shares of common stock (the "Dominion Commitment Shares"). In
conjunction with the SPA, we entered into a series of Leak Out Agreements in
which certain parties agreed that they would not sell, dispose or otherwise
transfer, in aggregate more than 5% of the composite daily trading volume of our
common stock. Pursuant to the Leak-Out Agreement between us and Caravel CAD Fund
Ltd., we issued 404,245 restricted shares of common stock.
On June 12, 2020, we entered into the Kingsbrook Convertible Notes with
Kingsbrook Opportunities Master Fund LP (the "Holder"), which was issued to the
Holder in conjunction with 250,000 shares of common stock.
Overview
We are a blank check company incorporated on September 7, 2016 in Delaware and
formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar Business Combination with
one or more businesses. We intend to effectuate our initial Business Combination
using cash from the proceeds of our Initial Public Offering and the Private
Placement, our securities, debt or a combination of cash, securities and debt.
The issuance of additional shares of common stock or preferred stock:
? may significantly dilute the equity interest of our investors;
? may subordinate the rights of holders of common stock if we issue preferred
shares with rights senior to those afforded to our common stock;
37
? could cause a change in control if a substantial number of our shares of common
stock are issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the stock ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our securities.
Similarly, if we issue debt securities, it could result in:
? default and foreclosure on our assets if our operating revenues after our
Business Combination are insufficient to pay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we have made
all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
? our inability to obtain additional financing if the debt security contains
covenants restricting our ability to obtain additional financing while such
security is outstanding;
? our inability to pay dividends on our common stock;
? using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our common
stock if declared, expenses, capital expenditures, acquisitions and other
general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation; and
? limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our competitors
who have less debt.
We are incurring significant costs in the pursuit of our acquisition plans. We
cannot assure you that our plans to raise capital or to complete a Business
Combination will be successful.
Restatement for Correction of an Error
The Company has determined that it was necessary to amend the June 30, 2020 Form
10-Q in order to restate the financial statements to record previously
unrecorded liabilities and to add certain disclosures related to contingent
liabilities. See Note 13 to the financial statements for additional details.
In addition to the restatement of the financial statements, certain information
within the following notes to the condensed consolidated financial statements
have been restated to reflect the correction of a misstatement discussed above
as well as to add disclosure language as appropriate to the following footnotes:
? Note 1. Description of Organization and Business Operations
? Note 2. Summary of Significant Accounting Policies
? Note 6. Dominion Convertible Promissory Notes
38
? Note 7. Kingsbrook Convertible Promissory Notes
? Note 8. Accrued Expenses
? Note 9. Accrued Issuable Equity
? Note 10. Commitments and Contingencies
? Note 11. Stockholders' Equity
? Note 14. Subsequent Events
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from September 7, 2016 (date of inception) through June 30,
2020 were organizational activities, those necessary to prepare for the Initial
Public Offering, which was consummated on June 7, 2017, and identifying a target
company for a Business Combination. We do not expect to generate any operating
revenues until after the completion of our initial Business Combination. We
generate non-operating income in the form of interest income on cash and
marketable securities held in the Trust Account and are incurring expenses as a
result of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2020, we had a net loss of $5,436,388, which
consists of operating costs of $3,513,039, interest expense of $270,257 related
to the issuance of the Dominion Convertible Notes and Kingsbrook Convertible
Notes and $1,657,522 of loss on the issuance of the Dominion Convertible Notes
and Kingsbrook Convertible Notes, offset by interest income on marketable
securities held in the Trust Account of $2,950 and a benefit for income taxes of
$1,480.
For the six months ended June 30, 2020, we had a net loss of $5,653,799, which
consists of operating costs of $3,760,631, interest expense of $270,257 related
to the issuance of the Dominion Convertible Notes and Kingsbrook Convertible
Notes, $1,657,522 of loss on the issuance of the Dominion Convertible Notes and
Kingsbrook Convertible Notes and a provision for income taxes of $3,827, offset
by interest income on marketable securities held in the Trust Account of
$38,438.
For the three months ended June 30, 2019, we had net loss of $10,830, which
consists of interest income on marketable securities held in the Trust Account
of $355,970, offset by operating costs of $296,377, and a provision for income
taxes of $70,423, respectively.
For the six months ended June 30, 2019, we had net income of $220,765, which
consists of interest income on marketable securities held in the Trust Account
of $948,284, offset by operating costs of $561,281, and a provision for income
taxes of $166,238, respectively.
Liquidity and Capital Resources
The completion of the Initial Public Offering and simultaneous Private
Placement, inclusive of the underwriters' exercise of their over-allotment
option in full, generated gross proceeds to us of $120,025,000. Related
transaction costs amounted to $7,345,436, consisting of $2,875,000 of
underwriting fees, $750,000 of deferred underwriting commissions payable (which
are held in the Trust Account) and $445,436 of Initial Public Offering costs.
Following the Initial Public Offering and the exercise of the over-allotment
option, a total of $116,150,000 was placed in the Trust Account and we had
$798,469 of cash held outside of the Trust Account, after payment of all costs
related to the Initial Public Offering and the exercise of the over-allotment
option.
As of June 30, 2020, we had cash and marketable securities held in the Trust
Account of $11,276,350. Interest income earned on the balance in the Trust
Account, amounting to approximately $386,000 as of June 30, 2020, may be
available to us to pay taxes. Through June 30, 2020, we have withdrawn
approximately $1,156,000 of interest income from the Trust Account to pay our
income and franchise taxes, of which no amounts were withdrawn during the six
months ended June 30, 2020.
As of June 30, 2020, we had cash of $257,601 held outside the Trust Account,
which is available for use by us to finance the costs associated with
identifying a target business, negotiating a Business Combination, due diligence
procedures and other general corporate uses. In addition, as of June 30, 2020,
we had accounts payable and accrued expenses of $995,052.
39
For the six months ended June 30, 2020, cash and restricted cash used in
operating activities amounted to $812,973. Net loss of $5,653,799 was affected
by stock-based compensation expense of $2,625,000, interest earned on marketable
securities held in the Trust Account of $38,438, loss on the issuance of the
Dominion Convertible Notes and Kingsbrook Convertible Notes of $1,657,522,
interest expense related to the amortization of the debt discount on the
Dominion Convertible Notes and Kingsbrook Convertible Notes of $252,493 and
changes in our operating assets and liabilities, which used cash of $344,249.
For the six months ended June 30, 2019, cash used in operating activities
amounted to $943,985. Net income of $220,765 was offset by interest earned on
marketable securities held in the Trust Account of $948,284 and changes in our
operating assets and liabilities, which used cash of $216,466.
On March 15, 2019, we entered into the Expense Reimbursement Agreement with our
Sponsor and KBL Management in recognition of the compensation expense incurred
by KBL Management for services provided by one of their employees on behalf of
the Sponsor to us. The Expense Reimbursement Agreement is effective January 1,
2019 until the earlier of (i) the consummation of a Business Combination or (ii)
our liquidation. Under the Expense Reimbursement Agreement, we will reimburse
the Sponsor for the compensation expense incurred by KBL Management for its
employee in the amount of $180,000 per year plus health insurance costs of
$1,139 per month. At our election, we may pay amounts due pursuant to a
non-interest bearing, unsecured promissory note. As of June 30, 2020, amounts
due under the Expense Reimbursement Agreement totaled $337,301 and has been
included in the March Promissory Note discussed below.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (which
interest shall be net of taxes payable and excluding deferred underwriting
commissions) to complete our initial Business Combination. We may withdraw
interest to pay taxes and up to $50,000 for liquidation expenses, if any. To the
extent that our capital stock or debt is used, in whole or in part, as
consideration to complete our initial Business Combination, the remaining
proceeds held in the Trust Account will be used as working capital to finance
the operations of the target business or businesses, make other acquisitions and
pursue our growth strategies.
We have until November 9, 2020 to complete an initial Business Combination. If
we are unable to complete a Business Combination by November 9, 2020, we will
(i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem
the Public Shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account, including interest (which interest
shall be net of taxes payable and less up to $50,000 of interest to pay
dissolution expenses), divided by the number of then outstanding Public Shares,
which redemption will completely extinguish public stockholders' rights as
stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining stockholders
and our board of directors, dissolve and liquidate, subject in the case of
clauses (ii) and (iii) to our obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. We intend to
seek stockholder approval for an extension of the time period for us to complete
the Business Combination.
Going Concern and Liquidity
As the Company merged into 180 on November 6, 2020, a going concern and
liquidity presentation as a stand-alone company for the restated financial
statements included herein, as of their filing date is not meaningful.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered
off-balance sheet arrangements. We do not participate in transactions that
create relationships with unconsolidated entities or financial partnerships,
often referred to as variable interest entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements. We
have not entered into any off-balance sheet financing arrangements, established
any special purpose entities, guaranteed any debt or commitments of other
entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a monthly fee of $10,000 for office space, utilities and administrative support
provided to us. We began incurring these fees on June 7, 2017 and will continue
to incur these fees monthly until the earlier of the completion of our initial
Business Combination or our liquidation.
40
Critical Accounting Policies
The preparation of condensed consolidated financial statements and related
disclosures in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, and income and expenses during the periods reported.
Actual results could materially differ from those estimates. We have identified
the following critical accounting policy:
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Common stock subject to mandatory
redemption are classified as liability instruments and are measured at fair
value. Conditionally redeemable common stock (including common stock that
feature redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
our control) are classified as temporary equity. At all other times, common
stock is classified as stockholders' equity. Our common stock features certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, 334,880 and 33,618 shares
of common stock subject to possible redemption at June 30, 2020 and December 31,
2019, respectively, are presented as temporary equity, outside of the
stockholders' equity section of our condensed consolidated balance sheets.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed consolidated financial statements.
© Edgar Online, source Glimpses
180 LIFE SCIENCES CORP. 
